Best Workplace Pension Provider for Small Businesses

Clare says

Smart Pension has the highest Trustpilot score of all our top list contenders, with many employers commenting on the excellent service they’ve received from this provider.

The user-friendly Smart Pension portal means you can comply with auto enrolment and extract real-time data and key management information, with ease and convenience. And the Smart Pension system integrates with most major payroll software providers to allow you to automate contribution uploads and stay compliant.

You’ll also get help with setting up and managing the scheme, as they offer full project management support, from transferring data, to communicating the change to employees, and providing ongoing support through a team of pension experts, who can support you as a customer.

On fees, it’s a middle ground option with relatively ongoing fees to pay as an employer, and low annual fees for employees.

One big bonus if you want to give your employees a good choice of investment strategies, is that there are 18 different funds on offer with this provider.

Fees

• Employer account charge of £22+VAT per month
• Contribution charges: There’s no charge if you employers pay contributions by Direct Debit. However, if you want to pay by BACS the charge is a one off set up fee of £250 plus a monthly fee of £50.
• Employee costs: 0.30% annual fee + a monthly fee of £1.75

There are no fees to transfer in or out.

One thing to note with fixed monthly fees is that if employees stop paying into the scheme, it’s possible their savings could get eaten up by fees as time goes by. It could therefore be financially beneficial for those leaving the workplace to transfer out of this kind of scheme.

Fund performance

Several of the Smart Pension funds have less than Among the funds that have 5+ years’ worth of data (some do not, so it wouldn’t be fair to come to any conclusions just yet) are some outstanding performances. In fact, some of the Smart Pension funds have the highest performers in our entire analysis.

The following all have exceptionally good 5-year returns:

Smart Growth Fund – Higher Risk: 53.2%
Smart North America Equity Index Fund: 110.9%
Smart Sharia Fund: 121.1%
Smart Ethical and Climate Fund: 81%

However, the Smart All Stocks Index-Linked Gilts Index Fund has returned -28.5% over the past 5 years. Proof that it’s worth looking into the individual fund you are invested in – it can make a substantial difference to the retirement lifestyle you’re able to enjoy.

Note – past performance does not guarantee future performance.

Clare says

NEST (National Employment Savings Trust) is the UK’s largest workplace pension provider with 13.5 million workers holding more than £45.3bn of retirement savings within their five funds.

Fees

There are zero costs for employers to set up a NEST pension.

NEST’s fees for employees are made up of two parts:

• A contribution charge of 1.8% on each new contribution into your pot
• An annual management charge of 0.3% on the total value of your pot each year

There are no fees to transfer in or out.

Historical fund performance

NEST has been one of the strongest performers in our workplace pension fund analysis. Its target-age retirement funds and Higher Risk funds do exceptionally well.

Note – past performance does not guarantee future performance.

Clare says

Cushon by NatWest has been designed to make auto-enrolment easy.

As an employer, you could also add workplace ISAs (Lifetime ISA, Junior ISAs) and a general investment account to your offering to encourage easy saving and investing for your employees through payroll.

Cushon has an excellent Trustpilot rating with many users praising the high service levels and fast responses.

On fees, Cushon is free for employers to set up, but the platform fees employees pay are over double the annual fees charged by several other providers on this page. On the positive side, there are no fixed elements (like the additional £1.75 per month charged by Smart Pension on top of annual fees) which can penalise those with smaller savings: everything that’s charged is proportional to the size of your pot.

Fees

No fees for employers to set up or manage their scheme.

Employees pay a 0.69% – 0.79% platform charge. Fees are arranged with the employer when setting the scheme.

There are no fees to transfer in or out.

Historical fund performance

Overall, fund performance has been good, beating the industry benchmarks in most cases, although many of the funds have less than 3 years’ worth of data so it may be too early to come to a verdict in those cases.

Note – past performance does not guarantee future performance.

Clare says

One in 5 UK workers saves with The People’s Pension, so this is a huge player in the market.

You’ll get help setting up and managing the scheme and payroll integration that works with most payroll software.

Fees

For employers, there is a one-off set up fee of £500 + VAT, which can be reduced to £300 + VAT if you sign up through a business adviser (a financial adviser, accountant, bookkeeper, or payroll provider). But the plus side of this fee structure is that there are no monthly fees to keep the account running.

For employees, there’s an annual management fee. The exact amount varies depending on how much you have in your savings pot. On a sliding scale, fees range from 0.21% (for those with £1m+) to 0.68% for those with small pots.

As with all schemes featured on this page, there are no fees to transfer in or out of the scheme.

Fund performance

Historical fund performance has been good, but nowhere near the strongest of the funds we’ve measured.

Note – past performance does not guarantee future performance.

Clare says

Penfold is very easy to set up (it takes 5 minutes), easy to administer, and is backed by big-name funds. The app and web platform are easy to use and, crucially, it’s also easy for employees to take control of their investments and see what they’ve got.

Penfold offers an additional “concierge” service for employers. This 1:1 support can help with onboarding staff and scheme implementation. This is a real plus point for Penfold and something Penfold’s business customers feedback positively on. Note, however, these support agents cannot give financial advice.

The financials are good for employers as this service is free to set up. However, for employees, this is not a cheap option. 0.75% per annum is one of the priciest plans in this list. Those with more than £100k fare better with fees reduced to 0.40%, although that is still higher than many other providers in this list.

Fees

For employers, there are no fees.

For employees, there is one annual fee: 0.75% of the value of your pot (or 0.88% for the Sharia plan).

If your pension pot size is larger than £100,000, the fee is reduced to: 0.40% (0.53% for the Sharia plan).

There are no fees to transfer in or out.

Historical fund performance

Average performance of Penfold’s funds come in slightly under the overall industry average. The Standard 4 fund has achieved a strong 53.21% over the past five years. But others haven’t done as well.

Note – past performance does not guarantee future performance.

Clare says

Now:pensions offers a very simple scheme – by which I mean it has no choice of funds as there’s just the one.

All employees’ contributions are invested into the Diversified Growth Fund until 10 years before retirement, when savings are moved into the Retirement Countdown Fund. So there’s no chance to select a fund that meets your own investment style, risk appetite or retirement goals here.

Fees of 0.30% + £1.75 per month for employees makes now:pensions one of the more affordable options for employees of small or medium sized companies. However, employers might balk at the £36 per month admin fee that are charged.

There is one big question mark over now:pensions, and that is their poor record when it comes to customer service. They have by far the lowest Trustpilot rating of all the providers we’ve featured: currently just 2.8 stars. There are many, many reviews stating that customer service is slow to respond and customers report having trouble withdrawing funds and closing their account. It’s a definite worry.

Fees

Charges for employers:

• £36 per month (or £12.50 per month if you use a third party payroll bureau)
• No set-up fees

Charges for employees:

• £1.75 per month admin fee
• 0.30% of the value of pension savings as an annual investment management fee

There are no fees to transfer in or out.

Historical fund performance

The Diversified Growth Fund (which holds around £4.4bn of pension savers’ money at present) has outperformed its benchmark, but falls far behind some other providers’ funds in the same category. The Retirement Countdown Fund has less impressive returns as you’d expect for a ‘safer’, less risky approach in the lead-up to retirement, only just beating its designated benchmark, and fairing worse than some competitors’ funds.

Note – past performance does not guarantee future performance.